Identify and penalize

The Federal Motor Carrier Safety Administration’s final rule to improve broker security regulations is a start – but it’s just a start.

That’s the stance of the Owner-Operator Independent Drivers Association, which has long advocated for more fairness between brokers and motor carriers.

OOIDA petitioned FMCSA in December to reconsider its final rule on broker and freight forwarder financial responsibility.

“The final rule should be enhanced to ensure transparency when a broker/freight forwarder’s financial responsibility falls below $75,000,” OOIDA wrote in the petition signed by President Todd Spencer. “The agency should also stipulate a seven-day period for the surety provider or financial institution to investigate and determine the validity of the claim. These and other modifications will promote a fair working environment between brokers/freight forwarders and motor carriers that will best serve the public interest.”

OOIDA’s petition for reconsideration comes at a time when broker issues have been a hot-button issue in the trucking industry. Freight fraud is estimated to cost the industry as much as $800 million annually.

Broker financial responsibility

On Nov. 16, FMCSA published a final rule regarding the financial responsibilities of brokers and freight forwarders.

The final rule aims to:

• Limit the asset types that can be maintained in broker or freight forwarder trusts to cash, treasury bonds and irrevocable letters of credit issued by a federally insured depository institution
• Establish procedures and requirements for the immediate suspension of broker and freight forwarder operating authority registration if the available financial security falls below $75,000
• Clarify when a broker or freight forwarder is in financial failure or insolvency and establish related requirements
• Amend FMCSA regulations to add civil penalties for surety and trust fund violations of the regulations and establish a process for the suspension of sureties and trusts in the event of non-compliance with the regulations

“It is FMCSA’s intent that the provisions in this rule will alleviate the effects of broker or trustee non-payment of claims,” the agency wrote. “Brokers who fail or refuse to pay carriers for legitimate services rendered will have their operating authority suspended and will be unable to continue accruing claims over time. Carriers will have more information to avoid contracting with unscrupulous brokers and could also receive payment for work completed in a more timely manner, without use of interpleader proceedings.”

OOIDA’s petition for reconsideration

OOIDA wants FMCSA to beef up its rule.

In its Dec. 18 petition for reconsideration, OOIDA told the agency that the final rule should be supplemented “to further alleviate the concerns” of brokers not paying.

“We believe various modifications can improve the economic health of the broker/motor carrier component of the transportation industry,” OOIDA wrote. “Additionally, small-business motor carriers who rely upon brokers will be spared financial loss from both brokers and ineffective bonds or trusts under these suggested amendments. This will result in safe, experienced motor carriers staying in business along with a more transparent process for both industry stakeholders and general consumers.”

As part of the petition, OOIDA requested additional details on how FMCSA plans to use the Unified Registration System platform to receive and publicize information from surety providers, trustees, brokers and freight forwarders, as well as to administer the immediate suspension of operating authority.

“At a minimum, FMCSA should publish an annual report detailing their efforts to combat broker fraud,” the Association wrote. “OOIDA supports a more formal collaborative process between federal regulators, law enforcement personnel and industry stakeholders to identify, penalize and protect against this fraudulent activity.”

As of press time, the final rule was scheduled to take effect on Jan. 16. The agency isn’t required to answer OOIDA’s petition before the rule starts.

Broker transparency

In addition to FMCSA’s final rule on broker financial responsibility, OOIDA petitioned the agency in 2020 to update broker transparency regulations. That petition was granted in 2023, but FMCSA is not scheduled to issue a proposal until late 2024.

“More can and should be done,” Spencer said. “We encourage FMCSA to continue to move in the right direction by expediting their rulemaking on OOIDA’s 2020 petition to enhance broker transparency. Truckers shouldn’t have to wait an additional year for the agency to ensure brokers are following federal regulations that have been required since 1980.”

OOIDA’s petition asked the agency:

• To require brokers to automatically provide an electronic copy of each transaction record within 48 hours after the contractual service has been completed
• To explicitly prohibit brokers from including any provision that requires carriers to waive their rights to access the transaction records

Regulation CFR 371.3 already requires that brokers keep records of each transaction with a carrier and that each party to the transaction has a right to view these records. OOIDA asked the agency to begin enforcing that regulation and to eliminate any loopholes allowing brokers to sidestep the rule.

OOIDA has told FMCSA repeatedly that truck drivers can’t afford to operate under the status quo any longer and that the agency must expedite its efforts to enforce broker transparency regulations.

“The continued delay is BS – transparency has been required since 1980,” Spencer said following the announcement of a projected Oct. 31 release date of the broker transparency rulemaking. “FMCSA stated in March 2023 the timeframe would be announced in the upcoming unified regulatory agenda. The agenda indicated June, and now they’ve inexplicably delayed more than a year. The public docket from our petition as well as the listening sessions they’ve held provided an abundance of material to produce a meaningful proposal by now.”

Adding to the frustration, the Oct. 31 target date is just for FMCSA to release a proposal. It would likely be well into 2025 before comments were received and reviewed. At that point, FMCSA would decide whether or not to move forward with a final rule. Considering the speed of government, it could be 2026 or later before a rule would take effect.

And without seeing the proposal, it’s unclear if it will do enough to address truckers’ concerns. LL